The departure of the Chancellor's right-hand man, Ed Balls, from the Treasury marks the end of an era and has attracted a lot of attention. The departure of Gordon Brown himself from the Treasury would attract even more attention.

To echo CJ, of Reginald Perrin fame, this column did not get where it is today by making rash predictions about the movement of tectonic plates. But one observation that can safely be made is that, if the Great Handover were to take place relatively soon, such has been the speculation that it would no longer come as a great surprise.

As demonstrated last week by the fuss about a new book by Derek Scott, formerly the Prime Minister's economic adviser, the atmosphere in Downing Street continues to be febrile. Those reports about the Prime Minister and Chancellor working closely together may have been true; but the deal brokered by Deputy Prime Minister John Prescott was a truce, not a real peace. The underlying tension within the duumvirate that founded New Labour is too strong.

The atmosphere of paranoia in Downing Street revives memories of the 1960s, when Prime Minister Harold Wilson felt surrounded by plotters. In those days there were several factions, one of which wanted to elevate Roy Jenkins (Chancellor 1967 to 1970) to the premiership; but Jenkins's support in the Labour Party never rivalled that of Gordon Brown.

Friends of the present Prime Minister say he is as fit and determined as ever. The impression given is that a zealot who can cheerfully disregard the admonitions of the Archbishop of Canterbury and the Pope modestly regards himself as immortal.

But there are others - and they are not obviously in the Chancellor's camp - who say Tony Blair has been consulting what they describe as 'his diminishing band of friends' as to the timing of his departure. The theory is that this should be if and when Iraq begins to look better, although Blair is never likely to be forgiven for the failure to find weapons of mass destruction.

These informed observers subscribe to the reported view of Jonathan Powell, Blair's aide at Number 10, that he does not wish to hand over to Brown at all. (Incidentally, as one reader recently pointed out, there was something fishy about the reported exchange between Powell and Spectator editor Alexander ('Boris') Johnson: when did two London cyclists ever stop at a red light?)

But the same observers point out that Blair has singularly failed to groom any obvious successor in his own image (a common failing among the leader class) and that the hot favourite, in the event of a sudden resignation, has to be Brown.

In a world where the electorate is fond of punishing incumbents, most dissatisfaction is focused on Blair. The pessimistic scenario for the Chancellor is that he never takes over; but a fairly gloomy one is that he might take over the fag end of a government. If it is decided that Blair is an electoral liability, then perhaps people will recall the way the Conservatives ruthlessly dispatched Mrs Thatcher and, with John Major, won an election in 1992 they would otherwise almost certainly have lost.

It is because the atmosphere is so febrile that the news about Derek Scott's book has received such attention. The leak came after the news of Powell's prediction that Brown would never succeed, and the expression of this possibility by political columnists Matthew Parris and my colleague Andrew Rawnsley.

The leak promised that the book Off Whitehall would reveal details of 'furious rows', 'fights for territory' and a state of 'unbearable tension' between Blair and Brown. As John Gielgud said in Harold Pinter's No Man's Land: 'I have known this before.'

But such is the atmosphere in Downing Street that the Chancellor seems to have leapt to the conclusion that the book was a fiendish plot by Number 10. The Treasury declared: 'This deliberate peddling of lies and distortions about Europe, tax and public spending and the management of public finances is deliberately designed to put the Treasury in a bad light and will not be tolerated.' Accusations flew around that Scott had written the book for the money, and that the leak was a deliberate attempt to gain maximum publicity.

Well, I have known Derek Scott since the 1970s, when he was an assistant to Denis Healey, and don't really believe he was trying to stir things up. I have also read the manuscript. The 'fiery' bits are few and far between. It is a serious book about the economics of the eurozone, and one of the most interesting aspects of it is the fact that throughout the time Tony Blair was contemplating 'going down in history' by joining the euro, his economic adviser was passionately against.

On this issue the tenor of Scott's advice, far from being a plot against the Chancellor, was, if anything, even more cautious about the euro than the Treasury's. But then Scott has never been forgiven by Labour for defecting to the SDP, even though such a move was no barrier to a job in Blair's Number 10.

But whereas I believe that on this occasion the Chancellor jumped too quickly to conclusions, it is not surprising he should harbour such suspicions. To my amazement I found on page 675 of Anthony Seldon's new book Blair that Number 10's paranoia stretched even to this column. Thus Seldon writes: 'Number 10 also monitored and viewed with suspicion Brown's and Balls's friends in the media, who included Routledge (Mirror) and William Keegan (Observer), Kevin Maguire (Guardian) and, after his departure [from the Treasury] Whelan, although in fact Brown's cultivation of such a group differed not at all from Blair and Campbell's network in Fleet Street.'

Whatever the tensions between Numbers 10 and 11 - and it has ever been thus since the far-off days when a Prime Minister was his own Chancellor - the Blair government is widely considered to have benefited enormously from the economic policies pursued by Brown, Balls and their creation, the Bank of England's Monetary Policy Committee.

It will be fascinating to see how the relationship between the Treasury and Bank develops. The governor, Mervyn King, has been flexing his muscles, speaking about house prices and government spending in a way that has annoyed the Treasury. But that's independence for you. The government can't have it both ways.

Meanwhile, as we witness what may be the twilight of the premiership of a man who has hugged President Bush too close, it is interesting to note a revelation in veteran journalist Geoffrey Goodman's recent book From Bevan to Blair (Pluto Press).

Goodman recalls a chance meeting with Nye Bevan in 1957, shortly before Bevan surprised the Labour Party by renouncing unilateralism and saying he did not wish to be sent 'naked into the conference chamber'.

Bevan told Goodman that he was convinced from discussions with Krushchev that 'such a renunciation' (unilateralism) would leave an incoming Labour government 'impotent to influence events'. But, and here is the bombshell, as it were: 'Bevan's great anxiety was that he needed negotiating strength to deal with the Americans - not the Russians.'

There is now an annual Aneurin Bevan lecture, and Brown gave the first two years ago with a clear signal that he was still in touch with the Labour Party's soul. Afterwards Michael Foot presented him with an original Vicky cartoon of Bevan, saying: 'We don't mind where you take it - wherever you move to.'